With Lloyds’ PPI bill topping £13bn, should regulators institute a time limit for claims?

Lloyds Bank’s decision to buy HBOS when it was drowning in toxic debt, and at an ultimate cost of £25bn to the taxpayer due to its bailout, was injudicious. But the “Black Horse” has recovered remarkably quickly.

Though it is not involved in investment banking, Lloyds’ behaviour towards its consumer customers was far from exemplary, incurring PPI liabilities of almost £13bn. Having made provision in Friday’s results for another £1.4bn in claims, Lloyds knows only too well that there is more to come. Once the regulators factor in claims for interest accrued, payouts to consumers could go on in perpetuity.

With all banks now facing greater and more costly capital requirements, which will affect lending and the recovery process, there is a strong case for setting out a timeframe for further claims. I would suggest that the end of the next banking year – March 2016 – is plenty time enough.

Nitin Khandhia, a director at law firm BTMK, says No.

The banks have been encouraging the FCA (and previously the FSA) to impose time limits in relation to bringing PPI claims, in the same way that insurance companies did with the misselling of endowment policies many years ago. The banks’ demands were rejected in 2013, and they should be rejected now.

Despite the vast media attention given to PPI claims, and the headline figures of payouts appearing on an almost daily basis, many people still find the process of making a PPI claim far from straightforward. And many are left with no option but to pursue their claims through claims management companies.

This means that they often give away up to 40 per cent of any sums recovered, simply to avoid dealing with the process themselves. The feeling remains that banks will continue to make the claims process difficult for individuals who don’t enlist the help of specialists. Until this situation is rectified, time limits should not be imposed.